Kōloa Rum loses lawsuit over ‘discriminatory’ shipping law
A US federal judge has dismissed a constitutional challenge to the Jones Act brought by Hawaii-based Kōloa Rum Company, which claimed shipping rules unfairly penalise island-based spirits producers.
Kōloa Rum Company filed its federal lawsuit on 25 February 2025 against federal officials responsible for enforcing the Jones Act.
In a memorandum opinion issued this month, chief judge James E Boasberg of the US District Court for the District of Columbia granted the federal government’s motion to dismiss the case, finding that Kōloa’s claims were time-barred and failed to state a claim on which relief could be granted.
The lawsuit targeted the Merchant Marine Act of 1920, commonly known as the Jones Act, which requires goods shipped between US ports to be carried on vessels that are US-built, US-owned and US-crewed.
Kōloa argued that the law significantly inflates freight costs for Hawaiian producers, placing them at a structural disadvantage compared with mainland competitors that can rely on trucking or rail.
For spirits producers operating in Hawaii, the Jones Act limits access to shipping options and has long been criticised for driving up the cost of transporting raw materials and finished goods to the US mainland.
Kōloa Rum contended that these restrictions violate constitutional protections and unfairly harm Hawaiian businesses by limiting competition and increasing operating costs.
While the court acknowledged that Kōloa had Article III standing to bring the case – recognising that the company had demonstrated a concrete economic injury – it ultimately ruled that the challenge was brought too late and that Congress, rather than the courts, is the appropriate forum to address the policy choices underpinning the Act.
‘Damaging, inequitable, and disadvantageous’
Reacting to the decision, Bob Gunter, founder of Kōloa Rum Company, said the company remains committed to highlighting the issue for Hawaiian businesses.
“We are disappointed that our constitutional challenge to the Jones Act was ultimately dismissed; however, we are proud of our efforts, as the Court recognised our Article III standing,” said Gunter.
“We filed this lawsuit to stand up for our community and address the damaging, inequitable, and disadvantageous effects this law has on Hawaiian businesses. While we disagree with the Court’s decision, we are evaluating our options to determine the best path forward.”
Attorney Joshua Thompson of Pacific Legal Foundation, which represented Kōloa, said the ruling would not end scrutiny of the law.
“Kōloa Rum brought this lawsuit to challenge the disastrous and discriminatory effects that the Jones Act has on all Hawaiian businesses,” Thompson explained.
“At a time when we should be championing pioneering American businesses like Kōloa Rum, the Jones Act puts them at a distinct disadvantage. While we disagree with the Court’s decision, we are still evaluating our best options going forward.”
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